The New 13F Filings Were Wild...

Key Concepts

• 13F Filing: A quarterly report required by the SEC for institutional investment managers with over $100 million in assets under management, disclosing their equity holdings.
• Value Investing: An investment strategy that involves picking stocks that appear to be trading for less than their intrinsic or book value.
• Circle of Competence: A concept popularized by Warren Buffett, referring to the specific industries or businesses an investor understands deeply.
• Capital Expenditures (CapEx): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, or technology infrastructure.
• Price-to-Earnings (P/E) Ratio: A valuation metric calculated by dividing the current share price by the company's earnings per share.
• Discounted Cash Flow (DCF): A valuation method used to estimate the value of an investment based on its expected future cash flows.
• Mag 7 (Magnificent Seven): A group of high-performing, influential technology stocks in the U.S. market.

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1. Berkshire Hathaway’s Strategic Shifts

• Google (Alphabet) Investment: Berkshire Hathaway significantly increased its position in Google, adding $1 billion in C-shares, bringing the total value to $15.6 billion. This is now their seventh-largest position.
• Leadership Transition: The video suggests this move may have been led by Greg Abel, as Buffett has previously stated that many tech companies fall outside his "circle of competence."
• Portfolio "Spring Cleaning": Berkshire exited 16 positions entirely this quarter. The speaker attributes this to a combination of Greg Abel’s new management style and the liquidation of smaller positions previously held by former manager Todd Combs (e.g., Visa, Mastercard, Domino’s, Amazon).
• Airlines: Berkshire added a $2.6 billion position in Delta Air Lines, despite Buffett’s historically cautious stance on the airline industry.
• Chevron: The firm reduced its position in Chevron by 35%.

2. Bill Ackman (Pershing Square) and Microsoft

• Microsoft Buy: Pershing Square opened a $2 billion position in Microsoft, now their fourth-largest holding.
• The "AI Spend" Thesis: Microsoft’s stock dropped up to 25% in Q1 due to investor concerns over massive capital expenditures in AI infrastructure. Ackman viewed this as a temporary market overreaction to a high-quality business, capitalizing on the price dip.
• Portfolio Rebalancing: Ackman completely exited his position in Google while increasing his Amazon stake by 20%.

3. Seth Klarman (Baupost Group) and Amazon

• Doubling Down: Klarman increased his position in Amazon by 47%, making it the largest holding in Baupost’s U.S. portfolio (12.7%).
• Market Panic: Amazon’s stock fell 18% in one week in February following an earnings call where the company projected $200 billion in future CapEx for AI and AWS.
• The Value Perspective: The speaker argues that the market’s reaction was "emotional" and "dumb," as the CapEx is a voluntary investment in growth rather than a fundamental business failure. The stock rebounded once investors realized AWS growth remained strong.

4. Other Notable Investor Moves

• Lee Lou (Himalaya Capital): Sold 71% of his Bank of America position.
• Mohnish Pabrai: Exited Aaris and reduced his stake in Transocean by 25%, while maintaining his focus on metallurgical coal.
• Howard Marks: Opened a minor position in Pinduoduo ($493,000 out of a $4 billion portfolio).
• Bill Ackman: Fully exited his long-standing position in Hilton, which he had held since 2018.

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Synthesis and Conclusion

The recent 13F filings reveal a common theme among top-tier value investors: capitalizing on short-term market panic. When companies like Microsoft and Amazon faced sell-offs due to increased capital expenditures for AI, investors like Bill Ackman and Seth Klarman viewed these as buying opportunities for high-quality businesses.

The "Big Money" managers are prioritizing companies with strong balance sheets and cash flow, even when those companies are currently spending heavily on future growth. The Berkshire Hathaway portfolio, under the influence of Greg Abel, appears to be undergoing a consolidation phase, shedding smaller, legacy positions to focus on larger, more strategic bets. The overarching takeaway is that while the market often reacts emotionally to quarterly earnings reports, disciplined value investors use these moments of volatility to acquire "wonderful companies at a fair price."